Largest ship to call at NY-NJ highlights productivity challenges

July 15, 2016  SOURCE: JOC.com  —  (photo JOC.com) This week’s arrival of the largest ship ever to dock at the Port of New York and New Jersey is bringing into focus the challenges the port faces in adapting to an era of fewer, but larger ships, each requiring more containers to be loaded and unloaded in a short space of time.

The MOL Benefactor, which can carry 10,100 twenty-foot-equivalent units and is the first ship to arrive at the port after coming through the Panama Canal’s new, larger locks, is expected to arrive at the Global Container Terminal in Bayonne, New Jersey, on Thursday and unload for two days.

It’s the first vessel on the G6 Alliance’s new NYX service, which links three Chinese ports with New York-New Jersey, Virginia and Savannah, and is expected to send a similarly sized vessel each week to the port.

The MOL Benefactor’s arrival marks an acceleration of the escalation in the size of vessels coming to the U.S. East Coast’s largest port. Those larger vessels will place new demands on the labor, truckers, terminal gates, chassis providers, and warehouses, requiring heightened coordination of them all.

The strains are particularly sensitive in the Port of New York and New Jersey, which has in recent years suffered sporadic bouts of congestion and delays in and around the terminals, for a variety of reasons.

Other ports in the past have faced the challenge of increased ship sizes, but usually more incrementally, said Henry Pringle, vice president at AlixPartners, a New York firm that consults on transportation and logistics issues. The current situation facing New York-New Jersey and other East Coast ports, is unique in that “it’s suddenly turning a switch and facilitating much greater capacity,” he said.

“All of the peak factors that you can imagine are just amplified when you have got these larger vessels calling,” he said. “Arguably the greatest challenge faced by the wider port community is just the number of trucks coming to and from the terminal. You suddenly have much higher congestion and peak hour demands on the drayage drivers and access to the gates.”

The opening of the Panama Canal’s new locks is the first of two events expected to result in bigger ships coming to New York-New Jersey. The second — the completion of a $1.3 billion project to raise the clearance under the Bayonne Bridge from 151 feet high to 215 feet — is expected by the end of 2017. That is expected to have a far larger impact — many neo-Panamax vessels, and a sizeable number of even smaller ships, can’t fit under the Bayonne Bridge. GCT Bayonne is the only major New York-New Jersey terminal that is outside the bridge and can accept the largest ships calling the port.

“Now we will begin to see the (number of) 10,000-TEU vessels begin to creep up, and these smaller vessels replaced,” said Bethann Rooney, assistant director of the port commerce department at the Port Authority of New York and New Jersey. “What we expect is that the number of vessel calls will begin to diminish, as the larger ships come there will be fewer vessel calls carrying the same or more cargo.”

Increasing vessel sizes can be seen from the 25 percent increase in the average capacity of ships visiting the port from 2012 to 2015. The average capacity of ships calling the port rose to 4,896 TEUs in 2015 from 3,900 TEUs in 2012.

About 4 percent of the roughly 2,500 ships that arrived at the port in 2015 could carry between 9,000 TEUs and 10,000 TEUs, and 30 percent could carry between 8,000 TEUs and 9,000 TEUs, according to port authority statistics. Twenty-four percent could carry 4,000 TEUs to 5,000 TEUs, and 15 percent could carry 6,000 TEUs to 7,000 TEUs.

Four years earlier, just 2 percent of the vessels that came to the port were sized from 9,000 TEUs to 10,000 TEUs, and 11 percent could carry from 8,000 TEUs to 9,000 TEUs. Fifty percent of the ships that arrived could carry 4,000 TEUs to 5,000 TEUs.

“Larger ships will be at berth longer, discharging and loading greater volumes at any given time, requiring greater landside efficiency and higher productivity,” said Louann Wong, a spokesperson for GCT Terminal, in a statement, noting that the terminal has handled large ships coming through the Suez Canal for two years. “Equally as important as capacity and cranes, is overall berth productivity, enabling faster vessel turnaround in port.”

Company investments in the terminal to respond to the demands include a semi-automated container processing system, larger cranes, and a radio-frequency identification in and out gate system, she said.

Rooney said the port authority is confident that the port will meet the demands of increased ship sizes, in large part because a group of port stakeholders, the Council on Port Performance, has been working on key productivity issues for at least two years. Between 5,000 and 6,000 additional chassis have been injected into the system by leasing companies in preparation for these larger ships, and the port has introduced a computerized system to allow closer tracking of containers through the terminals, she said.

Chassis availability in the port has improved of late through the addition of chassis and slow growth in cargo volume. However, creation of a proposed portwide “gray” chassis pool that would enable truckers to freely use chassis now controlled by three competing pools, remains stalled.

John Nardi, president of the New York Shipping Association, mindful of the big-ship trend, said employers have added 700 new workers in the last 2 1/2 years.

“We believe we have enough labor in place to handle the larger ships,” he said. “However, we continue to interview and prequalify individuals who have previously applied for jobs in case they are needed in the future.”

Still to be implemented at the port is an appointment system, which is intended to smooth the arrival of drayage trucks at the terminal throughout the day, aiming to reduce congestion. Proposals to extend terminal gate hours have failed to gain traction. Terminals have resisted the added costs of later hours, and some trucking interests say there is no point unless warehouses are open late to accept deliveries.

Rooney said that the task of resolving traffic issues in the port as larger ships arrive will depend on making sure that the whole system is working smoothly.

“It’s all inextricably connected,” she said. “So your ability to have a truck driver who has a chassis that’s available and roadworthy that is able to call at the terminal and get in and out of the terminal efficiently and deliver the cargo to a warehouse or distribution system is all tied together … And when the supply chain is working efficiently, the symptom of traffic on the roadway goes away.”

Contact Hugh R. Morley at Hugh.Morley@ihs.com and follow him on Twitter: @HughRMorley_JOC.

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